Asset management firm Hashdex recently engaged in discussions with the United States Securities and Exchange Commission (SEC) to address the regulator’s concerns related to its application to permit the Hashdex Bitcoin Futures Exchange-Traded Fund (ETF) to include spot Bitcoin in its portfolio.
According to a memorandum released by the Division of Trading Markets, the meeting took place on October 13, with the participation of six SEC officials and representatives from Hashdex, NYSE Arca, Tidal Financial Group, and the law firm K&L Gates.
During the meeting, Hashdex outlined its methodology for enabling the trading and inclusion of spot Bitcoin within the ETF on the Chicago Mercantile Exchange (CME), which falls under the regulatory oversight of the Commodity Futures Trading Commission (CFTC).
What sets Hashdex’s application apart is its unique approach to spot Bitcoin acquisition. Unlike other applications, it does not establish a surveillance-sharing agreement with cryptocurrency exchange Coinbase. Instead, Hashdex’s proposal involves procuring spot BTC directly from physical exchanges within the CME market. This approach makes it entirely dependent on CME pricing for its transactions, as disclosed in an SEC filing by NYSE Arca in late August.
A presentation delivered to SEC officials during the meeting also highlighted the reliance on the commission’s Teucrium Order, which states that the Bitcoin futures market has reached a sufficient level of development to support financial products seeking exposure to BTC.
Looking ahead, the SEC may request additional information before the application’s initial deadline on November 17, according to an individual with knowledge of the situation.
Hashdex boasts over $380 million in assets under management and currently offers 14 exchange-traded products (ETPs) across seven different countries.
It’s worth noting that the SEC granted approval for Hashdex’s Bitcoin Futures ETF in April 2022, and the product has been listed on NYSE Arca since September of the previous year. If the proposed rule change receives approval, the ETF will have the capacity to include spot Bitcoin in its holdings.
Numerous prominent asset management firms are racing to secure the first spot Bitcoin ETF listing in the United States. BlackRock’s ETF proposal was recently listed on the Depository Trust & Clearing Corporation (DTCC), a development that suggests approval may be imminent, as noted by Bloomberg ETF analyst Eric Balchunas.
“The prevailing consensus suggests that the SEC is likely to approve all spot ETFs within the next three months,” stated the source.